BUCHAREST, July 16, 2007 (AFP) - The US automaker Ford said on Monday it planned to build one of the biggest car plants in Europe in Romania by upgrading a factory that once belonged to the South Korean group Daewoo.
Ford's European director John Fleming was quoted in a statement as telling Prime Minister Calin Tariceanu that the company was committed to building 300,000 vehicles and 300,000 engines per year at the plant in the southern town of Craiova from 2011.
This would make it "one of the biggest car plants in Europe," the group said. Ford planned to invest 675 million euros (930 million dollars) to upgrade the factory which in 2006 under its former owners made 24,000 cars and 116,000 engines.
Fleming said the US group would double the number of employees at the plant to between 7,000 and 9,000. The Romanian government is selling a 72.4-percent stake in the company and Ford is the sole bidder for the plant. Ford did not disclose the price it had offered to pay for the shares.
Two other groups, General Motors and JC Russian Machines, had expressed interest in the auto plant but declined to make formal offers. In August 2006, Romania paid 60 million dollars (44 million euros) for a 51-percent holding in the facility that had belonged to Daewoo, which declared bankruptcy in 1999.
The South Korean company had paid 156 million dollars for a majority stake in the plant in 1994, and had invested another 850 million to modernise it. The planned investment by Ford follows a trend in the car industry of shifting production to eastern Europe, where production costs are low.
The French automaker Renault, which owns the Romanian car maker Dacia, is using Romania as a base to build a successful low-cost car for emerging markets. To the north, Slovakia has emerged as the eastern European centre of the auto sector, with Volkswagen, Peugeot and Kia among the major manufacturers investing in new factories.